from the keep-setting-good-precedents dept

As we've noted in the past, Perfect 10 appears to be a company who's entire reason for being is to set good precedents in copyright law, by filing ridiculous lawsuits and losing. So many important copyright precedents have come out of Perfect 10 cases, including ones on fair use and secondary liability. Some have argued (with fairly detailed explanations) how Perfect 10 is not a porn publisher at all, but rather a pure copyright troll that makes a living off of suing. While it seems to always lose in court, the problem is that some companies just pay up rather than fight. Back in 2011, we noted that Perfect 10 had sued Usenet provider Giganews. Earlier this year, the court smacked down Perfect 10 on a number of issues. And now, the court has done so again, handing a complete and total victory to Giganews.

First up, the claims of direct copyright infringement. Since Giganews is an intermediary, no luck there. The judge, not surprisingly, relies heavily on the famous Netcom case, which said that a bulletin board/usenet system isn't liable for "incidental copies" made automatically by the computers as part of an effort done by a third party. Here, the court notes that nothing in what Giganews does makes it directly liable. Furthermore, the judge notes that, as is all too typical of Perfect 10, even though its arguments had been rejected earlier in court, the company just repeated the same wrong argument again this time. Not surprisingly, it didn't work. The company then tried a new theory, and it didn't work either, because it just turned into Perfect 10 repeating the same already rejected arguments:

Turning to the undisputed evidence before the Court, Defendants have met their
burden to establish that Perfect 10 cannot prove causation for direct infringement as a
matter of law. Indeed, on identical facts (then presented as allegations, now with
evidence), Judge Matz and Judge Collins already so held....

[....]

Again, a claim for direct liability requires evidence that the Defendants directly or
actively caused the infringement. Perfect 10’s continued insistence that Defendants
allowed its subscribers to upload, download, and view infringing material is the stuff of
indirect or secondary liability, not direct liability.

Four months after Judge Matz rejected each of the arguments Perfect 10 advances
in opposition to this motion, Judge Collins reaffirmed that the evidence before the Court
does not support a claim for direct infringement as a matter of law....
Faced with the same allegations discussed above and now set forth in the evidence before
the Court, Judge Collins again held that such allegations were insufficient as a matter of
law to support a finding of direct infringement because such facts fail to support a finding
of direct causation.... However, Judge Collins permitted Perfect 10’s
claim for direct infringement against Giganews to proceed solely on the newly alleged
theory that Giganews “plac[ed] copies of copyrighted material from various internet
locations onto its own servers, and not at the request of customers ... .” ...Judge Collins expressly rejected each of Perfect 10’s other theories of direct
liability.

Although Perfect 10 repeats the arguments Judge Matz and Judge Collins already
rejected, the record is devoid of any evidence to support the only theory of direct liability
as to Giganews that survived the pleading stage. In the operative First Amended
Complaint, Plaintiff alleged on information and belief that Giganews itself, by way of its
employees, had uploaded infringing Perfect 10 images to the Usenet generally or
Giganews’ servers specifically.... Though Judge Collins noted
this was “not the strongest set of allegations,” Judge Collins held that it was at least
sufficiently plausible to pass the pleading stage in light of the fact that another website,
megaupload.com, had previously been found in criminal proceedings to have uploaded
massive quantities of copyrighted materials to its own servers. ...
After considerable discovery, there is simply no evidence to bear out that unlikely
allegation.

Rather than point to any evidence that Giganews’ employees or agents themselves
uploaded, downloaded, otherwise copied, displayed, or modified any work to which
Perfect 10 holds a copyright, Perfect 10 rehashes arguments already considered and
rejected. Namely, Perfect 10 once again argues that Giganews personally violated
Perfect 10’s copyrights by allowing users to upload content to its servers and by
obtaining and sending content to other Usenet servers through the peering process.
But the conduct of third party Usenet subscribers does not
support a claim of direct liability as to Giganews. The conduct of third parties is
relevant, if at all, to a claim of secondary infringement (contributory or vicarious), not
direct infringement. And Perfect 10 fails to articulate any meaningful difference
between the evidence before the Court and its allegations that Giganews “program[s] [its]
servers to distribute and download infringing conduct” and that Giganews “control[s]
which materials are distributed to and copied from other third party servers,” which Judge
Matz held insufficient as a matter of law to support a claim of direct infringement.

Okay, moving on to the question of indirect infringement. Once again, Perfect 10's argument is a complete and total flop. The court recognizes an important distinction that is almost always ignored by copyright maximalists looking to blame any platform that has some copyright infringement happening on its platforms: that you have to show that the platform is getting a benefit from that specific infringement, not from "people using the service in general for infringement." Perfect 10, not surprisingly, fails to persuade the court here:

Although the scope “draw” need not be substantial, Perfect 10 must still prove a
direct causal link between the infringing activities at issue in this case and a direct
financial benefit to Giganews. This action is a specific lawsuit by a specific plaintiff
against a specific defendant about specific copyrighted images; it is not a lawsuit against
copyright infringement in general on the Usenet. That is to say, the “direct financial
benefit” requirement demands more than evidence that customers were “drawn” to
Giganews to obtain access to infringing material in general. Perfect 10 must prove with
competent evidence that at least some of Giganews’ customers were “drawn” to
Giganews’ services, in part, to obtain access to infringing Perfect 10 material. Despite
extensive discovery (which is now closed) the record lacks (and Perfect 10 does not
identify) a single piece of evidence to that effect. Even if the scope of causation is
expanded to the broader category of erotic images, there is no evidence that any customer
was ever “drawn” to Giganews’ Usenet offerings to obtain access to erotic images.
“There is no evidence that indicates that [Giganews’] customers either subscribed
because of the available infringing [Perfect 10] material or canceled subscriptions
because it was no longer available. While a causal relationship might exist between
[Giganews’] profits from subscriptions and the infringing activity taking place on its
USENET servers, [Perfect 10] has not offered enough evidence for a reasonable juror so
to conclude.”

Instead, Perfect 10 points to evidence that there is a lot of copyrighted material
on the Usenet and concludes that the availability of copyrighted material in general
constitutes a draw. If anything, however, Perfect 10’s evidence that the Usenet is awash
in copyrighted material only supports the conclusion no reasonable juror could find a
direct causal connection between infringing Perfect 10 content and Giganews’ profits.
For example, if as Perfect 10 asserts, “staggering amounts of copyrighted works owned
by move producers and television networks are available” on Giganews’ servers ..., what evidence is there that any Giganews subscriber purchased
Giganews’ services in part because of the relatively miniscule number of Perfect 10
images available on Giganews’ servers? In short, there is none. But if the universe of
infringing material on the Usenet is as broad and diverse as Perfect 10 suggests, any
conclusion that subscribers were “drawn” to Giganews’ services as a result of the
availability of Perfect 10 content would be pure speculation. Speculation is not
evidence of causation.

Also, here's a tip: don't misrepresent the rulings of other judges in your case. Courts don't fall for it, and they don't like it:

Perfect 10 also argues that Judge Matz and Judge Collins “have already ruled that
the monthly fee charged by Giganews to its users to access allegedly infringing material
constituted a direct financial benefit.” ... Neither Judge Matz nor Judge Collins so held. In his order on
Defendants’ first motion to dismiss, Judge Matz emphasized the importance of the
procedural posture of the in holding that Perfect 10 had adequately alleged a claim for
vicarious infringement.... Indeed, Judge Matz distinguished
the motion to dismiss from Ellison v. Robertson, supra, and Netcom, supra, both of
which involved summary judgment after an ample opportunity for discovery.... In fact, Judge Matz correctly observed that the operative question is
whether there is a “causal relationship” between Perfect 10’s infringing content and
Giganews’ subscription revenues.... Judge Collins adopted Judge
Matz’ analysis and found that the same allegations were sufficient to advance the action
past the pleadings stage. However, after full discovery, the evidence does not bear out
Perfect 10’s allegations that the availability of its copyrighted content is a draw for
Giganews’ customers, and summary judgment in Giganews’ favor is consistent with
Judge Matz’ and Judge Collins’ liberal assessment of the sufficiency of the pleadings.

The court also (as others have before) notes that Perfect 10 seems to prefer sending confusing and incomplete DMCA notices that are not valid under the law. In fact, they often appear to be designed on purpose to make it difficult to comply, thus giving the company a reason to file a lawsuit. In this case, this harms Perfect 10 because it takes away any claim of Giganews having actual knowledge of infringing files.

As Judge Collins already observed, however, Perfect 10’s practice of sending
Giganews screenshots of a newsreader window along with instructions “to conduct
searches of specific names within certain newsgroups” and instructing Giganews “that all
of the messages yielded by those searches on a certain date contained infringing material”
...
fails to substantially comply with the requirements for a DMCA
takedown notice. In order to comply with the DMCA (and therefore confer actual
knowledge on the recipient), a takedown notice must identify “the material that is
claimed to be infringing or to be the subject of infringing activity and that is to be
removed or access to which is to be disabled, and information reasonably sufficient to
permit the service provider to locate the material.”....
(emphasis added). “The goal of this provision is to provide the service provider with
adequate information to find and address the allegedly infringing material expeditiously.” ....

Perfect 10’s takedown notices, which “point[] to a list of search results, not to any
material in particular,” ... obstruct this goal. As Judge Collins
observed, “the material accessible through the Usenet is in a constant state of flux. As
such, there is no certainty that any particular search will yield the exact same results at
different times. Searches moments apart could yield different results.” .... But even
if the results of such searches were consistent, Perfect 10’s search-screenshot takedown
notices “requires a Usenet provider to compare its search results to Plaintiff’s search
results in an onerous side-by-side, line-by-line manner” ... defeating
the service provider’s ability to “find and address the allegedly infringing material
expeditiously.” Viacom Int’l, Inc. v. YouTube, Inc., 940 F.Supp.2d at 115. This is
particularly true where, as here, Perfect 10’s voluminous takedown notices would require
a manual, line-by-line comparison of countless individual search results for each notice.
And even Perfect 10’s evidence revealed that their own search-criteria method “yielded
some messages that were non-infringing.” ... These aspects of
Perfect 10’s takedown notices are particularly problematic because a takedown notice
under the DMCA must also include “a statement that the complaining party has a good
faith belief that the use of the material in the manner complaint of is not authorized by the
copyright owner, its agent, or the law.”... But in the
absence of any assurance that Giganews’ search results would yield results consistent
with Perfect 10’s search, or that Perfect 10’s search results were limited to infringing
material, it would be impossible to make that necessary representation in good faith.

In fact, the court highlights that Perfect 10's CEO Norman Zada more or less admits that he could provide Giganews with actual details of infringing content very easily, but has chosen not to.

In fact, Perfect 10’s CEO, Norma Zada recently declared under oath that, using
the Message-ID extraction feature, he was able to extract the Message-IDs for 19 pages
of search results.... Using that same method, Zada estimated it
would take less than 15 minutes to extract the Message-ID’s for “more than 90% of the
infringing Perfect 10 content that Perfect 10 is aware of on Defendant’s servers.” ...
And in deposition, Zada testified it is “actually very easy for Perfect 10 to collect
message IDs to put into a DMCA notice” and that Perfect 10 has now extracted Message
IDs for “approximately 54,000 Perfect 10 messages,” but Perfect 10 refuses to submit a
DMCA takedown notice using that information

Rather, the court notes that whenever Giganews does get Message IDs, it does, in fact, remove that content quickly, as is required. In fact, this becomes clear from Perfect 10's own evidence in the case.

So we get another Perfect 10 loss in court, and another good ruling for intermediaries not responsible for either direct or indirect infringement. I doubt it will get Perfect 10 to stop suing others, but hopefully others won't be so quick to settle when they see how frequently the company loses.

from the well-that's-unfortunate dept

As you may have heard, this morning, the Supreme Court effectively killed off Aereo with an unfortunate and terribly problematic 6 to 3 ruling that can be summarized simply as the "looks like a duck" test. If you're not familiar with the history, decades back, when cable companies were first around, they started rebroadcasting network TV to cable subscribes, and the Supreme Court (rightly) ruled that this was perfectly legal. The broadcasters ran screaming and crying to Congress, who changed the law to create a retransmission setup, saying that if cable companies wanted to retransmit broadcast TV they had to pay fees. Aereo got around that by setting up a very different system -- or so we thought. The majority decision, written by Stephen Breyer, really just keeps going back to the fact that Aereo looks just like what those cable companies used to do... and therefore, given that Congress changed the law to outlaw that, Congress must have meant that Aereo should be illegal as well. The majority seems to view things as a black box, ignoring everything in the box. It just says "well, to end users and to networks, this is identical to the old cable systems." As for the very careful steps that Aereo took to comply with the law? The majority just brushes that off as meaningless.

Given Aereo's overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here. The subscribers of the Fortnightly and Teleprompter cable systems also selected what programs to display on their receiving sets. Indeed, as we explained in Fortnightly, such a subscriber “could choose any of the . . . programs he wished to view by simply turning the knob on his own television set.” ... The same is true of an Aereo subscriber. Of course, in Fortnightly the television signals, in a sense, lurked behind the screen, ready to emerge when the subscriber turned the knob. Here the signals pursue their ordinary course of travel through the universe until today's “turn of the knob”—a click on a website—activates machinery that intercepts and reroutes them to Aereo’s subscribers over the Internet. But this difference means nothing to the subscriber. It means nothing to the broadcaster. We do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into “a copy shop that provides its patrons with a library card.”

Of course, that's NOT the "single" difference between the systems, and that's only part of why the majority ruling is so troubling. The second part of the ruling -- and the one that will have serious consequences for many other technologies -- is the determination that Aereo's service is not just a "performance" but a public performance. As we've discussed, this is the key part of the case, as it will determine just how badly it will impact cloud computing. The majority tries to indicate it shouldn't impact others by adding an important clause that might actually give Aereo (or others) a roadmap to get around this ruling. See if you can spot it:

Moreover, the subscribers to whom Aereo transmits television programs constitute “the public.” Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other. This matters because, although the Act does not define “the public,” it specifies that an entity performs publicly when it performs at “any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” The Act thereby suggests that “the public” consists of a large group of people outside of a family and friends.

Yeah, that "contemporaneously perceptible" tidbit could become pretty damn important. It seems like Aereo could just take away live TV viewing and basically become more DVR-like, requiring people to watch things on their own schedule starting with a brief delay, such that no one is really watching contemporaneously and potentially this no longer becomes a "public performance."

Still, that seems like a pretty ridiculous standard for what is and what is not public. The majority, unfortunately, brushes off concerns about how this might impact other cloud providers by going back to that "looks like a duck" test:

For one thing, the history of cable broadcast transmissions that led to the enactment of the Transmit Clause informs our conclusion that Aereo “perform[s],” but it does not determine whether different kinds of providers in different contexts also “perform.” For another, an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work....

Further, we have interpreted the term “the public” to apply to a group of individuals acting as ordinary members of the public who pay primarily to watch broadcast television programs, many of which are copyrighted. We have said that it does not extend to those who act as owners or possessors of the relevant product. And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content

Still, there are serious concerns about this. At the very least, it's going to lead to a lot of litigation as people try to determine if other sorts of cloud storage systems are engaged in "public performances." The dissent, written by Justice Scalia, highlights how problematic this ruling is on many levels. Rather than simplifying things down to a "looks like a cable duck" test, Scalia actually looks at copyright law, and the question of whether what Aereo does is direct infringement (in fact, he later says that even though it's clearly not direct infringement, Aereo might be liable for secondary infringement), and points out that there's no reasonable way to find Aereo guilty of direct infringement.

Aereo
offers access to an automated system consisting of routers,
servers, transcoders, and dime-sized antennae. Like a
photocopier or VCR, that system lies dormant until a
subscriber activates it. When a subscriber selects a program, Aereo’s system picks up the relevant broadcast
signal, translates its audio and video components into
digital data, stores the data in a user-specific file, and
transmits that file’s contents to the subscriber via the
Internet—at which point the subscriber’s laptop, tablet, or
other device displays the broadcast just as an ordinary
television would. The result of that process fits the statutory definition of a performance to a tee: The subscriber’s
device “show[s]” the broadcast’s “images” and “make[s] the
sounds accompanying” the broadcast “audible.” §101. The
only question is whether those performances are the product of Aereo’s volitional conduct.

They are not. Unlike video-on-demand services, Aereo
does not provide a prearranged assortment of movies and
television shows. Rather, it assigns each subscriber an
antenna that—like a library card—can be used to obtain
whatever broadcasts are freely available. Some of those
broadcasts are copyrighted; others are in the public domain. The key point is that subscribers call all the shots:
Aereo’s automated system does not relay any program,
copyrighted or not, until a subscriber selects the program
and tells Aereo to relay it. Aereo’s operation of that system is a volitional act and a but-for cause of the resulting
performances, but, as in the case of the copy shop, that
degree of involvement is not enough for direct liability.

Scalia further calls out Breyer for using a questionable "resemblance" test based on nothing in the actual law. He points out that it's not illegal to be "similar to cable TV," but rather you have to look at the actual law and see if Aereo violates it. He further notes that the majority ruling relies heavily on taking a few snippets of the Congressional record out of context, and then leaping to the conclusion that Aereo is too similar to those old cable systems, rather than really exploring the differences within the blackbox:

The
former (which were then known as community-antenna
television systems) captured the full range of broadcast
signals and forwarded them to all subscribers at all times,
whereas Aereo transmits only specific programs selected
by the user, at specific times selected by the user. The
Court acknowledges this distinction but blithely concludes
that it “does not make a critical difference.” ...
Even if that were true, the Court fails to account for other
salient differences between the two technologies. Though
cable systems started out essentially as dumb pipes that
routed signals from point A to point B, ... by
the 1970’s, that kind of service “ ‘no longer exist[ed],’ ”
...
At the time of our Teleprompter decision, cable companies
“perform[ed] the same functions as ‘broadcasters’ by deliberately selecting and importing distant signals, originating programs, [and] selling commercials,”... thus
making them curators of content—more akin to video-on-demand services than copy shops. So far as the record
reveals, Aereo does none of those things.

Because of all of this, Scalia points out that the majority decision is not only self-contradictory, but part of it actually makes a huge part of the rest of it entirely superfluous... and then creates tremendous uncertainty.

The rationale for the Court’s ad hoc rule for cablesystem lookalikes is so broad that it renders nearly a third
of the Court’s opinion superfluous. Part II of the opinion
concludes that Aereo performs because it resembles a
cable company, and Congress amended the Act in 1976 “to
bring the activities of cable systems within [its] scope.”
.... Part III of the opinion purports to address
separately the question whether Aereo performs “publicly.” .... Trouble is, that question cannot
remain open if Congress’s supposed intent to regulate
whatever looks like a cable company must be given legal
effect (as the Court says in Part II). The Act reaches only
public performances, see §106(4), so Congress could not
have regulated “the activities of cable systems” without
deeming their retransmissions public performances. The
upshot is this: If Aereo’s similarity to a cable company
means that it performs, then by necessity that same characteristic means that it does so publicly, and Part III of
the Court’s opinion discusses an issue that is no longer
relevant—though discussing it certainly gives the opinion
the “feel” of real textual analysis.

Making matters worse, the Court provides no criteria
for determining when its cable-TV-lookalike rule applies.
Must a defendant offer access to live television to qualify?
If similarity to cable-television service is the measure,
then the answer must be yes. But consider the implications of that answer: Aereo would be free to do exactly
what it is doing right now so long as it built mandatory
time shifting into its “watch” function. Aereo would not
be providing live television if it made subscribers wait to
tune in until after a show’s live broadcast ended. A subscriber could watch the 7 p.m. airing of a 1-hour program
any time after 8 p.m. Assuming the Court does not intend
to adopt such a do-nothing rule (though it very well may),
there must be some other means of identifying who is and
is not subject to its guilt-by-resemblance regime.

Take this a step further, and as Scalia notes, suddenly you implicate a lot of other services:

Two other criteria come to mind. One would cover any
automated service that captures and stores live television
broadcasts at a user’s direction. That can’t be right, since
it is exactly what remote storage digital video recorders
(RS–DVRs) do, ... and the Court insists that its “limited holding” does
not decide the fate of those devices.... The
other potential benchmark is the one offered by the Government: The cable-TV-lookalike rule embraces any entity
that “operates an integrated system, substantially dependent on physical equipment that is used in common by
[its] subscribers.” ... The Court sensibly avoids that approach because it
would sweep in Internet service providers and a host of
other entities that quite obviously do not perform.

That leaves as the criterion of cable-TV-resemblance
nothing but th’ol’ totality-of-the-circumstances test (which
is not a test at all but merely assertion of an intent to
perform test-free, ad hoc, case-by-case evaluation). It will
take years, perhaps decades, to determine which automated
systems now in existence are governed by the traditional volitional-conduct test and which get the Aereo
treatment. (And automated systems now in contemplation
will have to take their chances.) The Court vows that its
ruling will not affect cloud-storage providers and cable television systems..., but it cannot deliver
on that promise given the imprecision of its result-driven
rule. Indeed, the difficulties inherent in the Court’s
makeshift approach will become apparent in this very
case. Today’s decision addresses the legality of Aereo’s
“watch” function, which provides nearly contemporaneous
access to live broadcasts. On remand, one of the first
questions the lower courts will face is whether Aereo’s
“record” function, which allows subscribers to save a program while it is airing and watch it later, infringes the
Networks’ public-performance right.

Scalia further notes that it's quite troubling to see the Supreme Court effectively picking winners and losers in the technology space, noting as a warning how close the Court came to outlawing the VCR based on bogus claims of "we'll die!" by Hollywood.

We came within one vote of declaring the VCR contraband 30 years ago in Sony....
The dissent in that case was driven in part by the plaintiffs’ prediction that VCR technology would wreak all
manner of havoc in the television and movie industries.
...
(arguing that VCRs “directly threatened” the bottom line
of “[e]very broadcaster”).

The Networks make similarly dire predictions about
Aereo. We are told that nothing less than “the very existence of broadcast television as we know it” is at stake.
.... Aereo and its amici dispute those
forecasts and make a few of their own, suggesting that a
decision in the Networks’ favor will stifle technological
innovation and imperil billions of dollars of investments in
cloud-storage services. We are in no position to judge the validity of those
self-interested claims or to foresee the path of future
technological development.... Hence, the proper course is not to bend and twist
the Act’s terms in an effort to produce a just outcome, but
to apply the law as it stands and leave to Congress the
task of deciding whether the Copyright Act needs an
upgrade.

Unfortunately, the majority decided to go in the other direction. And it has just created a huge mess for cloud computing that may result in tremendous stifling of important innovation online.

from the because-cafc-is-a-joke dept

What do you know? The Supreme Court has completely shot down two more decisions from the "patent appeals court," which is supposed to be an expert in patent law. The court of appeals for the Federal Circuit (CAFC), which was set up explicitly to cover "complicated" patent cases, has been getting shot down by the Supreme Court left and right over the past few years, often unanimously. It happened a month ago on fee shifting and it happened twice more today on key patent cases: Limelight v. Akamai and Nautilus v. Biosig.

In the Limelight case, CAFC had made the somewhat ridiculous ruling that companies can be guilty of inducing infringement even if there is no direct infringement. Basically, everyone agreed that at no point did Limelight actually infringe on Akamai's patents, because part of the steps are actually completed by Limelight's users, rather than Limelight itself. The CAFC felt that was good enough, and even though at no point does Limelight do everything in Akamai's patent, it still infringed. The Surpeme Court, thankfully, found this ruling to be nonsensical. And, once again, the Supreme Court smacks around the CAFC in its ruling:

Neither the Federal Circuit... nor respondents... dispute the proposition that liability for inducement must be predicated on direct infringement. This is for good reason, as our case law leaves no doubt that inducement liability may arise “if, but only if, [there is] . . . direct infringement.”...

One might think that this simple truth is enough to dispose of this appeal. But the Federal Circuit reasoned that a defendant can be liable for inducing infringement under §271(b) even if no one has committed direct infringement within the terms of §271(a) (or any other provision of the patent laws), because direct infringement can exist independently of a violation of these statutory provisions...

The Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent.

Yes, the Supreme Court is saying that the CAFC -- which is supposed to be the expert in understanding patents and patent law -- fundamentally misunderstands what it means to infringe on a patent. Ouch.

The ruling by Justice Alito goes on to point out that the CAFC seems to be trying to set up an entirely new concept of inducing infringement where there is no direct infringement -- and that's clearly not what the law allows. As the ruling notes, if Congress wanted that to be the law, it could write that into the law. But it has not. The Supreme Court further notes (importantly) that "inducement" is different than the criminal standards of "aiding and abetting" (this is an issue we've discussed repeatedly in copyright law -- so everyone insisting that inducing and aiding & abetting are equivalent may want to read carefully what SCOTUS has to say here).

The Nautilus case involved "ambiguous" patent claims -- a major problem in the patent world today. Once again, CAFC took a rather patent maximalist view of things, allowing many ambiguous claims, but the Supreme Court unanimously rejects that as ridiculous:

We conclude that the Federal Circuit’s formulation, which tolerates some ambiguous claims but not others, does not satisfy the statute’s definiteness requirement.

The CAFC standard was that you could reject the claim only if it was "insolubly ambiguous" -- in other words, only if a court couldn't work through multiple interpretations to pick a reasonable one. But, as noted above, the Supreme Court says that goes against the very basic idea of patent law. As the ruling (by Justice Ginsburg) notes:

It cannot be sufficient that a court can ascribe some meaning to a patent’s claims; the definiteness inquiry trains on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post hoc. To tolerate imprecision just short of that rendering a claim “insolubly ambiguous” would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of uncertainty,” ... against which this Court has warned.

Rather than choose a different standard, however, the Supreme Court punts the case back to CAFC to see if it can try again, this time with a better standard that maybe, just maybe, the Supreme Court will accept next time around.

Between these recent decisions and the current ethics scandal at CAFC, at what point will we finally consider just putting the court out of its misery. It has never served any purpose other than to massively expand patent law way outside of what the law is supposed to do. It's great that the Supreme Court has finally been putting it back in line, but it seems like there must be a more effective way of doing this than having CAFC hand down so many bad decisions.

from the interesting-theories dept

So about a week ago, we noted that Quentin Tarantino had lost big in his bizarre lawsuit against Gawker for publishing a link to a script he was working on for The Hateful Eight, which had been rumored to have been leaked all over Hollywood. The judge pointed out that Tarantino's wacky theories on contributory copyright infringement made no sense, because they couldn't even show any direct copyright infringement. Of course, Tarantino's lawyers were given a chance to try again, and try again they have with an even more wacky theory. They're now charging Gawker with direct copyright infringement, not for linking to the script, but because they claim someone at Gawker must have downloaded the script, and they prove that because Gawker writers knew how many pages there were in the script.

On January 23, 2014, after Gawker obtained the Screenplay Download
URL in response to its request for leak of an unauthorized infringing copy of the
Screenplay, Gawker itself illegally downloaded to its computers an unauthorized
infringing PDF copy of the Screenplay -- read it and learned that the PDF download
document was 146 pages -- directly infringing Tarantino’s copyright.

Tarantino also claims that they induced the person who uploaded the screenplay to AnonFiles to do so and that Gawker's reporters "fabricated a story" about how the document had been made publicly available. It's not clear how Tarantino or his lawyers could possibly know that. Either way, the lawsuit remains quite a stretch -- and certainly could create serious problems for other journalists if the theories that Tarantino is presenting are considered valid copyright infringement.

from the nice-try,-quentin dept

We didn't write about this case when it came out because it just seemed so ridiculous, but filmmaker Quentin Tarantino sued Gawker Media earlier this year for linking to a script he had apparently been working on. There had been a bunch of media coverage over the fact that his script for The Hateful Eightleaked, and was being shared around Hollywood, though not online. Gawker then asked anyone if they'd seen a copy, leading to a followup post which included a link to the newly leaked script.

Tarantino argued that by soliciting from the public a copy of the script and then subsequently linking to it, Gawker was guilty of contributory infringement. Thankfully, a federal court that actually understands copyright law has quickly disabused Tarantino of that bizarre interpretation of copyright law, granting Gawker's motion to dismiss. The big problem: at no point anywhere in the process above, did Tarantino's lawyer show how Gawker's actions resulted in anyone infringing on anyone's copyright. That makes it quite hard to pin "contributory infringement" when there's no direct infringement in the first place:

However, nowhere in these paragraphs or anywhere else in the
Complaint does Plaintiff allege a single act of direct infringement committed by any member of the
general public that would support Plaintiff’s claim for contributory infringement. Instead, Plaintiff
merely speculates that some direct infringement must have taken place. For example, Plaintiff’s
Complaint fails to allege the identity of a single third-party infringer, the date, the time, or the
details of a single instance of third-party infringement, or, more importantly, how Defendant
allegedly caused, induced, or materially contributed to the infringement by those third parties

In a footnote, the court further notes that even if Tarantino's lawyers could dredge up some example of direct infringement based on someone reading the script, the lawsuit still wouldn't make any sense:

Even if Plaintiff alleged that individuals accessed the links contained in Defendant’s article
in order to read Plaintiff’s script, such an allegation would still not support Plaintiff’s contributory
infringement claim against Defendant. Simply viewing a copy of allegedly infringing work on one’s
own computer does not constitute the direct infringement necessary to support Plaintiff’s
contributory infringement claim. See Perfect 10, Inc., 508 F.3d at 1169 (where alleged primary
infringers merely view pages containing infringing images, but do not “store[] infringing images on
their computers,” there is no infringement). In addition, based on the allegations of the Complaint,
there can be little doubt that Plaintiff has a strong claim for direct infringement against Doe 1, a/k/a
AnonFiles.com. However, Plaintiff has not alleged and it is highly unlikely that Plaintiff will be able
to plead facts demonstrating that Defendant somehow induced, caused, or materially contributed
to the infringing conduct by publishing a link to the screenplay after it was wrongfully posted on
AnonFiles.com.

The court notes that Gawker spent a lot of effort explaining why this is fair use but notes that, "albeit persuasive and potentially dispositive," it doesn't even need to bother with that argument since there's no infringement to defend against fair use here anyway.

Once again, it seems like people who grow up totally immersed in a world of copyright maximalism automatically leap to the conclusion that "something I don't like" must be an infringement of copyright. Thankfully, the law (mostly) doesn't work that way.

from the going-off-the-reservation dept

Another day, another troubling ruling out of the Federal Circuit court (CAFC) which handles patent appeals. We wrote about this a little over a year ago. It actually involved CAFC reviewing two separate, but similar cases, concerning whether or not companies could be found liable for inducing infringement if no single party actually violates the patent, but a group of different parties, combined, serve to infringe on all the claims of the patent. This is tricky for a variety of reasons. In one case, involving Akamai suing Limelight, Limelight doesn't directly infringe on all of the claims of Akamai's patents, because some of the steps are completed by Limelight users, rather than by Limelight itself. Similarly, in the case of McKesson v. Epic Systems, Epic doesn't infringe on any of the claims of McKesson's patent -- but in combination, its users may do so, though none do so individually.

So here's where it gets tricky. The lower court had found that since no single party infringes on a patent, then there's no direct infringement. And if there's no direct infringement then there's no infringement that the defendants could "induce." This seems reasonable. The fear, with these cases, was that CAFC would say that multiple different parties, each doing different pieces that are covered by claims, could be lumped together into direct infringers, even if none of them fully infringes. That could create massive liability for purely innocent bystanders who do a minor link in a chain.

Thankfully, CAFC does not go that far in its ruling (though one dissenting judge felt it should). Instead, it just basically wipes out the concept that you can't have inducement without direct infringement, arguing that inducement is apparently something entirely separate from direct infringement. That's... troubling. You can see the reasoning (and it's worth reading the whole thing), in that they're saying if multiple parties, through their separate actions, combine to infringe -- and all those actions are directed by a third party -- then isn't it reasonable to assume that that party is still "inducing" infringement? But, as the dissenters note, that seems to be making up a wholly new interpretation of inducement, far from the one that Congress or the courts has allowed in the past. As one of the dissents notes:

The majority opinion is rooted in its conception of what Congress ought to have done rather than what it did. It is also an abdication of this court’s obligation to interpret Congressional policy rather than alter it. When this court convenes en banc, it frees itself of the obligation to follow its own prior precedential decisions. But it is beyond our power to rewrite Congress’s laws. Similarly, we are obliged to follow the pronouncements of the Su-preme Court concerning the proper interpretation of those acts.

In other words, CAFC's majority ruling here has gone off the reservation in a big way to fashion a ruling of how it thinks the world should work, but not in accordance with what the law actually says.

It also opens up a huge can of worms. Because even if no one party is actually infringing, suddenly third parties can be liable for inducing infringement. Infringement that... um... didn't occur. So that seems like a problem. Of course, it would have been even worse if they had gone with the plan that cobbled together direct infringement by all the separate players, even those who were doing very minor things (such as tagging content, in the Akamai case).

Either way, it seems likely that some of the parties here will ask the Supreme Court to weigh in, and hopefully they'll clarify that without someone infringing directly, there is no infringement to "induce."

from the say-what-now? dept

Perfect 10 is probably a lot more famous for filing copyright infringement lawsuits than publishing any sort of images. And it seems to always lose. In the process, the company has helped set a variety of useful precedents, mainly in the area of fair use. Yet the company forges on, suing every third party it can find. Last year, we detailed RapidShare's fascinating response to Perfect 10, which finally lays out in great detail some of the company's practices -- such as allegations that it sends faulty or otherwise questionable takedown notices in the hopes that they're not taken down so the company can sue.

Earlier this year, we noted that its latest target was the well known file storage service, MegaUpload. Given the similarity with this case to many other Perfect 10 cases, we had hoped that the judge would make quick work of dismissing it. Tragically, that's not what happened. Embedded below is the unfortunate ruling from Judge Irma Gonzalez, who mostly ruled against MegaUpload in its motion to dismiss the lawsuit. You can read the whole thing, but the truly scary part for me is where the court says MegaUpload may be guilty of direct infringement.

This is crazy. Direct infringement charges are used against the actual party doing the infringing. Most service providers don't have to deal with that, but instead the focus is on third party liability, things like contributory infringement, vicarious infringement or inducement. Here, however, the judge actually says that MegaUpload is involved enough that it could be found guilty of direct infringement:

Drawing all reasonable inferences in Perfect 10's favor, Megaupload serves as more than a passive conduit, and more than a mere "file storage" company: it has created distinct websites, presumably in an effort to streamline users' access to different types of media (e.g., megaporn.com, megavideo.com)... it encourages and, in some cases pays, its users to upload vast amounts of popular media through its Rewards Programs.... it disseminates URLs for various files throughout the internet... it provides payouts to affiliate websites who maintain a catalogue of all available files... and last, at a minimum, it is plausibly aware of the ongoing rampant infringement taking place on its websites. Taken together, Perfect 10 has adequately alleged Megaupload has engaged in volitional conduct sufficient to hold it liable for direct infringement....

This still doesn't make any sense. Everything described seems relevant to indirect third party liability. None of it seems to involve direct infringement. Honestly, I'm just confused how the court made the leap here. While this was just to deny the motion to dismiss, this might not bode well for Megaupload... and Perfect 10 may finally score a big legal win.

from the a-good-start dept

The MPAA has recently decided that "cyberlockers" are enemy number one on its most wanted list, even though they serve perfectly legitimate purposes. As something of a test case, the MPAA sued Hotfile (and its owner, directly) with an astonishingly weak case. After reading it, we were surprised that it didn't include more detail. The case seemed full of conjecture and claims that simply didn't match with reality. While I still think the main show is whether or not Hotfile is guilty of secondary infringement via inducement, the MPAA was certainly betting on a direct infringement claim to be a key part of the argument.

"Nothing in the complaint alleges that Hotfile or Mr. Titov took direct, volitional steps to violate the plaintiffs' infringement. There are no allegations, say, that Hotfile uploaded copyrighted material. Therefore, under the great weight of authority, the plaintiffs have failed to allege direct copyright infringement."

Where this becomes really important is that it means that Hotfile may be protected by the DMCA's safe harbors. Direct infringement isn't covered by the safe harbors. Now, the case will shift (among other things) to see whether or not (like YouTube and Veoh) Hotfile has correctly met the conditions to get safe harbor protection. Of course, it's entirely likely that the MPAA, in its quixotic quest, will appeal this particular part of the ruling, but next time, they should try to provide some actual evidence of direct infringement rather than just insisting that it must be true.

from the you-said-what-now? dept

A few days after everyone already knew it had seized the domains of some sites that apparently were associated with streaming sporting events online, Homeland Security has put out its official press release about the domain name seizures. As many people thought, Homeland Security basically admits that it decided to seize these domains at this time because of the Super Bowl. Nice to see that Homeland Security is working for the NFL these days.

Eric Goldman was kind enough to send over the affidavit that Homeland Security used to seize the domains this time around (it's embedded below), but as we saw last time around, the affidavit itself is chock full of legal and technical errors, compounded by assertions-as-facts that seem to have little basis in reality. This is immensely troubling, especially given that the specific legal issues here are hardly settled law, and Homeland Security seems to be acting as if these cases are no brainers, allowing them to flat out seize domains, even when those websites have been declared perfectly legal in their home countries.

The biggest problem is that Homeland Security seems to suggest -- without a hint of doubt -- that merely linking to infringing content is criminal copyright infringement. That is a huge stretch. The affidavit appears to make it clear that it believes that these sites are guilty of direct criminal copyright infringement, rather than any sort of contributory copyright infringement. As we've discussed in the past, the courts have tended to say that embedding and linking can be contributory infringement, but not direct infringement. Homeland Security and ICE may be in for a bit of legal trouble trying to prove that embedding is direct infringement.

As with the last batch of seizures, it quickly becomes clear that Homeland Security was taking orders from private companies, and made absolutely no effort whatsoever to determine if the assertions made by those private parties (who might be helped by having Homeland Security shut down competitors and/or more innovative solutions) were accurate. For example, the affidavit, written by yet another recent addition to the Homeland Security force (though, unlike last time, when it was a kid fresh out of college, this time the guy, agent Daniel Brazier, was a police officer before this job came calling) seems to rely solely on information from various sports leagues (the NFL, NBA, NHL, WWE and UFC -- I'm really surprised that MLB isn't included, but that's probably only because it's the off-season), and appears to make no attempt to independently verify much of the information provided by those leagues. For example, without any evidence or proof, he asserts that the leagues "suffer significant negative impact from the unauthorized streaming of live television programming."

You would think that such an assertion would require proof. There is none. There are more assertions related to this, but no evidence that wider distribution of the video (including the commercials) does any actual harm. Agent Brazier claims that because of these streams, it impacts the league's ability to sell game tickets. This is laughable. Years ago, these same sports leagues would claim that having games shown on TV "hurt" the ability to sell tickets. Only recently have some of the leagues realized this is simply untrue. Larger audiences lead to more connected fans, meaning more fans willing to come out to see games live, because they know that the live experience is totally and completely different than the on-screen experience.

I find it disturbing that Homeland Security would repeat this blatant myth in order to support suppressing and censoring websites.

There are some other issues as well. Part of the argument against atdhe.net, ilemi and channelsurfing.net is that they embed from elsewhere online streams from MSNBC. MSNBC apparently told Agent Brazier that it "had not authorized third party distribution over the internet of its broadcasts" by these sites. One little problem: if I go visit MSNBC TV, I see live streaming of content from the channel. And, if I click on the "clip & share" link, I am given an option to embed the stream. Yup. It certainly looks like MSNBC does, in fact, give permission to embed its content on other sites. Anyway, I've embedded some video below from MSNBC. I'm curious if this makes Techdirt a criminal enterprise. Perhaps I'll find out after Homeland Security seizes our domain.

Furthermore, part of the claim of "criminality" on these various sites are the fact that advertisements are "periodically displayed at the bottom of the video." Of course, since these sites appear to be embedding the videos from elsewhere, that would suggest that the advertisements have nothing to do with the sites in question, but with whichever site the video originated from. Are Homeland Security's investigators really confusing such basic points on how the internet works?

Finally, it appears that every one of these sites clearly stated that it did not host any content, and that it obeyed the local laws from where the server was located. The affidavit mentions this each and every time... and then doesn't seem to care at all about this. Now, the argument against this, of course, is that Homeland Security doesn't care one bit about the laws in other countries, and is only concerned about the laws in the US. That's all well and good... in theory. But reality makes this a bit more complex. If the website is hosted and operated in a foreign country, claiming that the domain name itself is subject to US laws seems like a huge stretch, and will only serve to increase concerns from foreign countries that the US government has too much control over the internet. Even worse, in the case of Rojadirecta, Agent Brazier seems to flat-out admit that the site targets people in Spain by highlighting how much traffic it gets in Spain. So if the site is hosted in Spain and clearly targets people in Spain -- and the affidavit admits this -- why is a US court saying the domain can be seized?

Unlike last time, when the magistrate judge in question literally rubber stamped the affidavit, at least magistrate judge Frank Maas appears to have decided to really sign this document. However, there is no indication that he followed the rules required under Fort Wayne Books v. Indiana, which requires a higher standard than probable cause when attempting to take "materials presumptively protected by the First Amendment" out of circulation. There is no indication that any effort is made to surpass these basic First Amendment hurdles. There is no indication that the judge took the time to find out whether or not these seizures were required to preserve evidence, as case law suggests is necessary in such circumstances.

Once again, it appears that Homeland Security is acting as something of a rogue cowboy operation, where it feels no compunction about seizing domains under an extremely questionable legal theory that linking or embedding is somehow direct copyright infringement. I've now spoken to numerous lawyers about this, and I can't find one who thinks this is a clear case of criminal copyright infringement. Similarly, there are serious questions concerning the fact that these websites are all hosted in foreign countries, and all of them made it clear that they sought to obey the laws in their own countries. Even more amazing is that despite the fact that many of these issues were raised previously, Homeland Security has simply decided to forge ahead. One hopes that a court will put a stop to these seizures before too long.

from the seems-like-a-stretch dept

Just as with last time Homeland Security's Immigrations & Customs Enforcement (ICE) group seized a bunch of domain names, the deeper you look into what sites were targeted, the more questions are raised about how ICE seems to interpret the law in its own unique manner. Lots of people do this, but usually they're not the federal government with the ability to simply seize property with no adversarial hearing and no concern for either due process or the First Amendment.

For example, it appears that a bunch of the domains seized this week were focused on sports streaming. Of course, this all seemed to come down on Super Bowl week, so we're almost surprised that ICE didn't announce the seizures from the NFL's headquarters, like they did at Disney's headquarters last summer. Among the other sites seized (beyond the ones we mentioned yesterday) are Channelsurfing.net, Firstrow.net, Atdhe.net and Ilemi.com. At this point, we've now seen Homeland Security seize .com, .org and .net domain names.

I'll be looking into more detail on all of these sites (many of which have already set up shop under different domain names) to get a better understanding, but after my initial review of Channelsurfing.net, a Swedish site, there are really serious questions raised. That's because Channelsurfing -- a site based in Sweden -- does not appear to host any content, nor link to any downloadable content. Instead, it was built entirely of embeds of streaming video offerings from elsewhere on the internet (and the site was known to obey takedown requests). Nearly four years ago, we questioned whether merely embedding videos could be copyright infringement.

While we haven't yet seen the affidavit ICE used this time around, if the affidavit used last time is any indication, ICE agents claim that these sites are involved in direct infringement of copyright for criminal purposes. We've already noted that there is no such thing as criminal contributory infringement right now, so "direct" infringement is the only real option for ICE.

And that's a big problem for ICE.

That's because embedding a video from another site is almost certainly not direct infringement. The case that gets the most attention on this is Perfect 10 v. Google in the 9th Circuit, which discussed Google's in-line linking of images hosted elsewhere. As the court ruled:

Google does not, however, display a copy of full-size infringing photographic images for purposes of the Copyright Act when Google frames in-line linked images that appear on a user's computer screen. Because Google's computers do not store the photographic images, Google does not have a copy of the images for purposes of the Copyright Act. In other words, Google does not have any "material objects... in which a work is fixed... and from which the work can be perceived, reproduced, or otherwise communicated" and thus cannot communicate a copy.

The court went on to conclude that HTML instructions do not themselves cause infringing images to appear on a user's computer screen because the HTML instructions merely convey an address to the user's browser, which itself must then interact with the server that stores the infringing image. Accordingly, the mere provision of HTML instructions, in the view of the 9th Circuit, does not create a basis for direct copyright infringement liability.

Now, a few caveats on this. This ruling still only really matters in the 9th Circuit, and it's doubtful that the domain seizures ran through the 9th Circuit. However, this ruling has been relied on elsewhere, so it's a bit presumptuous to assume that it absolutely does not apply elsewhere. There are also separate questions about whether or not knowingly including infringing embeds changes the equation, but the point is it's certainly not a black-and-white legal question. That's why little things like due process and adversarial hearings on these things matter. The law is anything but clear cut on this particular issue, and seizing a domain name without even letting a court hear the arguments on the other side is immensely troubling. That Homeland Security has continued to do this despite the serious questions raised about their last round of seizures suggests it's an organization that is not interested in the rule of law, due process or the First Amendment at all, but is on some sort of odd quixotic quest to please entertainment industry partners. This is not how our government is supposed to act.